Sunday, June 02, 2002

Budget gives to the rich, not the poor

        Ohio's budget fix, which passed the Senate Thursday night, contains protections for some of its wealthiest citizens and the promise of future funding for certain business and university priorities. But it imposes sacrifices on services that help young children and the poor, and it borrows too much for current and future needs.

        Gov. Bob Taft is expected to sign the budget next week, though he can cut out items line by line.

        The Senate passed the $1.9-billion budget which, among other things, raises cigarette taxes by 31 cents a pack, depletes the state's reserve fund of about $600 million, and forces new cuts in spending.

        Some of those cuts will hurt the most vulnerable.

Early childhood suffers

        The budget proposal mandates cuts of $30 million from Ohio Department of Education programs that don't directly aid school-age kids in classrooms during regular hours. Instead, the cuts will hit state-funded early childhood programs and after-school programs, which aren't awash in funds and already have waiting lists.

        Gov. Taft will also slash $225 million from state agencies' budgets in 2003. Given commitments Gov. Taft already has made to fund elementary and secondary schools, colleges and local governments, he may have no choice but to slice child welfare and services for the mentally ill and disabled.

        So what happens now to the governor's earlier plans to bolster Mental Retardation and Developmental Disabilities services? How about the Help Me Grow early learning strategy for infants through 3 years old?

        “We need to be funding education, higher education and economic recovery; I couldn't agree more. But we have a lot of unmet needs in this state for children,” says Gayle Channing Tanenbaum, legislative director of Public Children Services Association of Ohio.

        State lawmakers did seek other sources of revenue, but they shied away from achieving long-term solutions.

        They voted to impose a new tax on trusts, putting Ohio in a class with most other states that treat trusts like any other taxable resource. But they set the tax to expire Dec. 31., 2004.

        In Ohio, trust beneficiaries are taxed on income they receive from trusts, but they are not taxed on undistributed income that accrues in trusts. The new law levies taxes on that accrued income and is expected to raise $104 million.

        Trusts are a taxable area ripe for harvest. For instance, a trust that annually earns $50,000 undistributed income would pay $1,859 in taxes annually. There are 7,600 trusts in Ohio that each earn $50,000 to $500,000 a year, according to state figures.

        Nevertheless, House members made sure that these affluent taxpayers only temporarily carry more of the load. After the tax law sunsets Dec. 31, 2004, lawmakers will again have to screw up their courage to vote to tap the trust funds.

Long-term gaps

        But apparently lawmakers are not afraid to pay the state's bills by credit.

        The new budget authorizes the state to borrow $50 million to finance the first year of Gov. Bob Taft's Third Frontier. It's a 10-year commitment, earmarking $1.6 billion in state funds to certain universities and businesses to create new high-tech industries.

        The budget also usurps Ohio's tobacco lawsuit settlement for the deficit, requiring the state to borrow to pay for its planned school construction.

        Such stopgap measures shortchange kids and leverage our future. Gov. Taft's line-item veto could soften that blow.

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